Correlation Between Hartford Small and Hartford Core

Can any of the company-specific risk be diversified away by investing in both Hartford Small and Hartford Core at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hartford Small and Hartford Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hartford Small Pany and Hartford E Equity, you can compare the effects of market volatilities on Hartford Small and Hartford Core and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hartford Small with a short position of Hartford Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Small and Hartford Core.

Diversification Opportunities for Hartford Small and Hartford Core

0.62

Correlation Coefficient

Hartford Small  Hartford Core

Poor diversification

The 3 months correlation between Hartford and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Small Pany and Hartford E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford E Equity and Hartford Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hartford Small Pany are associated (or correlated) with Hartford Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford E Equity has no effect on the direction of Hartford Small i.e., Hartford Small and Hartford Core go up and down completely randomly.

Pair Corralation between Hartford Small and Hartford Core

Assuming the 90 days horizon Hartford Small Pany is expected to generate 1.06 times more return on investment than Hartford Core. However, Hartford Small is 1.06 times more volatile than Hartford E Equity. It trades about 0.03 of its potential returns per unit of risk. Hartford E Equity is currently generating about -0.06 per unit of risk. If you would invest  1,755  in Hartford Small Pany on October 5, 2024 and sell it today you would earn a total of  28.00  from holding Hartford Small Pany or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Hartford Small Pany  vs.  Hartford E Equity

Hartford Small Pany

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Pany are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford E Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hartford Small and Hartford Core

The main advantage of trading using opposite Hartford Small and Hartford Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Small position performs unexpectedly, Hartford Core can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hartford Core will offset losses from the drop in Hartford Core's long position.

The idea behind Hartford Small Pany and Hartford E Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.